Homework Help is Here – Start Your Trial Now!
Business
Accounting
Swifty Company issued its 7%, 25-year mortgage bonds in the principal amount of $3,230,000 on January 2, 2011, at a discount of $135,000, which it proceeded to amortize by charges to expense over the life of the issue on a straight-line basis. The indenture securing the issue provided that the bonds could be called for redemption in total but not in part at any time before maturity at 105% of the principal amount, but it did not provide for any sinking fund. On December 18, 2025, the company issued its 11%, 20-year debenture bonds in the principal amount of $4,180,000 at 103, and the proceeds were used to redeem the 7%, 25-year mortgage bonds on January 2, 2026. The indenture securing the new issue did not provide for any sinking fund or for redemption before maturity. a. Prepare journal entries to record the issuance of the 11% bonds and the redemption of the 7% bonds. (Record entries in the order displayed in the problem statement. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually. List all debit entries before credit entries.) Account Titles and Explanation Cash. Bonds Payable Premium on Bonds Payable Bonds Payable Loss on Redemption of Bonds Cash Discount on Bonds Payable The Debit b1. Indicate the income statement treatment of the gain or loss from redemption. is reported as 4,305,400 Credit KORDO

Swifty Company issued its 7%, 25-year mortgage bonds in the principal amount of $3,230,000 on January 2, 2011, at a discount of $135,000, which it proceeded to amortize by charges to expense over the life of the issue on a straight-line basis. The indenture securing the issue provided that the bonds could be called for redemption in total but not in part at any time before maturity at 105% of the principal amount, but it did not provide for any sinking fund. On December 18, 2025, the company issued its 11%, 20-year debenture bonds in the principal amount of $4,180,000 at 103, and the proceeds were used to redeem the 7%, 25-year mortgage bonds on January 2, 2026. The indenture securing the new issue did not provide for any sinking fund or for redemption before maturity. a. Prepare journal entries to record the issuance of the 11% bonds and the redemption of the 7% bonds. (Record entries in the order displayed in the problem statement. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually. List all debit entries before credit entries.) Account Titles and Explanation Cash. Bonds Payable Premium on Bonds Payable Bonds Payable Loss on Redemption of Bonds Cash Discount on Bonds Payable The Debit b1. Indicate the income statement treatment of the gain or loss from redemption. is reported as 4,305,400 Credit KORDO

Intermediate Accounting: Reporting And Analysis
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable
Section: Chapter Questions
Problem 7C
See similar textbooks
icon
Related questions
Question
Swifty Company issued its 7%, 25-year mortgage bonds in the principal amount of $3,230,000 on January 2, 2011, at a discount of $135,000, which it proceeded to amortize by charges to expense over the life of the issue on a straight-line basis. The indenture securing the issue provided that the bonds could be called for redemption in total but not in part at any time before maturity at 105% of the principal amount, but it did not provide for any sinking fund. On December 18, 2025, the company issued its 11%, 20-year debenture bonds in the principal amount of $4,180,000 at 103, and the proceeds were used to redeem the 7%, 25-year mortgage bonds on January 2, 2026. The indenture securing the new issue did not provide for any sinking fund or for redemption before maturity. a. Prepare journal entries to record the issuance of the 11% bonds and the redemption of the 7% bonds. (Record entries in the order displayed in the problem statement. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually. List all debit entries before credit entries.) Account Titles and Explanation Cash Bonds Payable Premium on Bonds Payable Bonds Payable Loss on Redemption of Bonds Cash Discount on Bonds Payable The Debit b1. Indicate the income statement treatment of the gain or loss from redemption. is reported as 4,305,400 Credit ONU
Transcribed Image Text:Swifty Company issued its 7%, 25-year mortgage bonds in the principal amount of $3,230,000 on January 2, 2011, at a discount of $135,000, which it proceeded to amortize by charges to expense over the life of the issue on a straight-line basis. The indenture securing the issue provided that the bonds could be called for redemption in total but not in part at any time before maturity at 105% of the principal amount, but it did not provide for any sinking fund. On December 18, 2025, the company issued its 11%, 20-year debenture bonds in the principal amount of $4,180,000 at 103, and the proceeds were used to redeem the 7%, 25-year mortgage bonds on January 2, 2026. The indenture securing the new issue did not provide for any sinking fund or for redemption before maturity. a. Prepare journal entries to record the issuance of the 11% bonds and the redemption of the 7% bonds. (Record entries in the order displayed in the problem statement. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually. List all debit entries before credit entries.) Account Titles and Explanation Cash Bonds Payable Premium on Bonds Payable Bonds Payable Loss on Redemption of Bonds Cash Discount on Bonds Payable The Debit b1. Indicate the income statement treatment of the gain or loss from redemption. is reported as 4,305,400 Credit ONU
Expert Solution
steps

Step by step

Solved in 3 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Accounting for Merchandise Inventory
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Intermediate Accounting: Reporting And Analysis
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Cornerstones of Financial Accounting
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning
Excel Applications for Accounting Principles
Excel Applications for Accounting Principles
Accounting
ISBN:
9781111581565
Author:
Gaylord N. Smith
Publisher:
Cengage Learning
Principles of Accounting Volume 1
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College
Financial Accounting
Financial Accounting
Accounting
ISBN:
9781305088436
Author:
Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:
Cengage Learning
SEE MORE TEXTBOOKS